Sometimes the Cure Is Worse Than the Disease: The One-Way White-Collar Sentencing Ratchet

Vol. 38 No. 3

By

Carlton Gunn worked as an assistant federal public defender from 1983–2011 in Los Angeles; Tacoma, Washington; and as a visiting assistant for four months in Alaska. He recently became of counsel to the criminal defense and civil rights law firm of Kaye, McLane, and Bednarski. Myra Sun has been a federal public defender in the Central District of California, and a public defender in the Washington state courts, since 1989.

From the Bureau of Prisons Web site:

Name     Register No.     Age-Race-Sex     Release Date

BERNARD L. MADOFF     61727-054      73-White-Male     11-14-2139

[Age at commencement of sentence: 70     Age at end of sentence: Death]

 

Not so long ago, the phrase “white-collar crime” conjured up visions of “Club Fed,” federal prison “camps” that allowed offenders to serve short prison sentences in dormitory settings with fewer restrictions on their personal freedom than other prisoners. This is no longer true. To the general public, these changes came in the wake of the relatively recent, large-scale fraud schemes of the 2000s, such as those involving the corporate officers of the Texas energy company Enron and New York’s investment guru Bernard Madoff. In reality, however, the U.S. Sentencing Commission has been hard at work since 1987, gradually narrowing the disparity between sentences for white-collar offenses and crimes such as those involving violence, stealing, and firearms through amendments to the sentencing guidelines. As a result, this disparity is disappearing. For better or worse, Madoff’s sentence of 1,800 months following his early guilty plea is nearly six times longer than the high end of the 262–327-month advisory sentencing guideline range for a “career offender” defendant entering an early guilty plea to his third bank robbery conviction—even one committed with a firearm. See U.S.S.G. § 4B1.1(c)(3).

The Sentencing Commission thus has focused on the problem of white-collar and “blue-collar” sentence disparity. But it has done it in the wrong way, by grossly increasing white-collar crime sentences. It has eliminated, or at least lessened, the human rights problem of disparity between defendants whose differences may be rooted in race, class, and social factors. But it highlights another human rights problem in this country—the unhesitating and grossly excessive use of incarceration as a purported remedy for crime.

The “Cure” for Disparity: Higher Sentences for White-Collar Crime

Concern for disparity in sentencing first arose as a political issue on the national stage in the 1970s and 1980s and led eventually to the federal Sentencing Reform Act. Concerns about disparity in sentencing were one of the driving forces behind that Act. See S. Rep. No. 98-473, at 38, 41–46, 52, reprinted in 1984 U.S.C.C.A.N. 3182, 3221, 3224–29, 3235. The Act created federal sentencing guidelines modeled after the sentencing guidelines that several states had already begun using. Using such guidelines, it was believed, would at least eliminate disparity between defendants with similar records who had been found guilty of similar kinds of conduct. See, e.g., Justice Stephen Breyer, Justice Breyer: Federal Sentencing Guidelines Revisited, 14 Crim. Just. 28 (spring 1999) [hereinafter Guidelines Revisited].

Indeed, one of the statutory provisions that was included in the Act specifically made disparity a consideration. See 18 U.S.C. § 3553(a)(6) (requiring sentencing court to consider “the need to avoid unwarranted sentence disparities among defendants with similar records who have been found guilty of similar conduct”). The statute also provided that the Sentencing Commission “shall assure that the guidelines and policy statements are entirely neutral as to the race, sex, national origin, creed, and socioeconomic status of offenders.” 28 U.S.C. § 994(d). It did not address how the correlation between those factors and other factors, such as community ties, employment record, and family ties and responsibilities should be addressed, though it did direct the Commission to take those factors into account “only to the extent that they do have relevance.” Id.

Left unaddressed by the Sentencing Reform Act—perhaps because it is a problem akin to comparing apples and oranges—was how to address disparities between sentences for different types of crimes, such as white-collar crime and blue-collar crime. That was left—at least initially—to the Sentencing Commission’s development of the guidelines. And it was a relatively lesser concern at the start; Justice Breyer, who was a member of the first Sentencing Commission that wrote the original guidelines and reputedly was the main drafter, has explained that seemingly conflicting goals of punishment led to a “key compromise,” in the form of an agreement to base the guidelines largely on judges’ “typical past practice” in imposing sentences, as established by an analysis of data from thousands of past cases. See Guidelines Revisited, at 30; Stephen Breyer, The Federal Sentencing Guidelines and the Key Compromises upon Which They Rest, 17 Hofstra L. Rev. 1 (fall 1988) [hereinafter Key Compromises]. The averages were biased upward, however, by the unexplained exclusion of cases in which nonincarceration sentences of probation had been granted, which if included presumably would have been entered as “0-month” sentences and would have pulled the averages down significantly. See Amy Baron-Evans, Sentencing by the Statute, at 36–37 (Apr. 29, 2009), available at www.fd.org/odstb_SentencingResource3.htm (last visited Oct. 21, 2011) (citing and discussing U.S. Sentencing Commission, Supplementary Report on the Initial Sentencing Guidelines and Policy Statements (June 18, 1987)).

Various concerns, including a concern about the disparity between white-collar crime sentences and blue-collar crime sentences, did lead to some variation from past practice. As Justice Breyer has put it, there was an “adjust[ment] to avoid unfair anomalies” in the treatment of white-collar crime compared to what he referred to as “blue-collar crime,” Guidelines Revisited, at 30, and white-collar crime sentence guidelines were therefore somewhat greater than “past practice,” id. See also Key Compromises, at 20–21 (“To mitigate the inequities of these discrepancies, the Commission decided to require short but certain terms of confinement for many white-collar offenders, including tax, insider trading, and antitrust offenders who previously would have likely received only probation.”). The alternative of eliminating or reducing the disparity through decreases in blue-collar sentences from past practice was apparently not considered.

Thus began a narrowing of the white-collar crime/blue-collar crime disparity by a slow but steady ratcheting up of the white-collar crime guidelines—in particular, the fraud/theft guideline. One commentator who was previously a Department of Justice (DOJ) expert, Professor Frank Bowman, noted in a critical article after leaving the DOJ that the Commission “tweaked the theft and fraud guidelines nearly annually” after they were first written. Frank Bowman, Pour Encourager les Autres? The Curious History and Distressing Implications of the Criminal Provisions of the Sarbanes-Oxley Act and the Sentencing Guidelines Amendments That Followed, 1 Ohio St. J. Crim. Law 373, 387 (spring 2004) [hereinafter Distressing Implications].

The changes always “tended to increase guideline sentence levels for economic offenders,” id., and they were not prompted by the empirical research that the Supreme Court described in Kimbrough v. United States, 552 U.S. 85 (2007), as the Sentencing Commission’s “important institutional role,” id. at 109. Rather, the Commission started with its conclusions; as one example, the 1989 amendment was justified simply as intended “to provide additional deterrence and better reflect the seriousness of the conduct,” U.S.S.G. app. C, amend. 99 (explanation for amendment). In later instances, the amendments were driven by congressional directives arising out of bills passed in response to high-visibility frauds or the “crime problem du jour.” See, e.g., U.S.S.G. app. C, amend. 647 (explanation for amendment) (“This amendment implements directives to the Commission contained in sections 805, 905, and 1104 of the Sarbanes-Oxley Act of 2002. . . .”); U.S.S.G. app. C, amend. 576 (explanation for amendment) (“This amendment responds to the directives to the Commission contained in section 4 of the Identity Theft and Assumption Deterrence Act of 1998. . . .”).

One commissioner warned that “the perceived absence of empirical research establishing the need” for these early changes meant the Commission’s mandate of “policy development through research was being supplanted by symbolic signal sending by Congress.” U.S. Sentencing Commission, Fifteen Years of Guideline Sentencing 56 (Nov. 2004). The process was driven not by data that showed that current sentences were, for example, failing to deter, but by entities in the system—judges on the Judicial Conference’s criminal law committee, the Probation Office, and the DOJ—who all favored higher sentences. While the defense bar was represented, their influence was limited; in the 2001 discussions, for example, the defense bar merely obtained mitigating changes at lower levels of loss. Frank Bowman, The 2001 Federal Economic Crime Sentencing Reforms: An Analysis and Legislative History, 35 Indiana L. Rev. 5, 30, 33 (2001).

After the 2003 increases in the loss guidelines, nominally tied to the Sarbanes-Oxley Act, the politically driven quest for higher guidelines lost credibility even with the former DOJ expert, Professor Bowman, who had supported the 2001 amendments. “Reducing sentences may sometimes be a bad idea,” he observed, “but raising sentences cannot always be a good idea.” Distressing Implications, at 439–40. Professor Bowman later spoke generally of the guidelines as having become “a one-way upward ratchet increasingly divorced from considerations of sound public policy and even from the commonsense judgments of frontline sentencing professionals who apply the rules.” Frank Bowman, The Failure of the Federal Sentencing Guidelines: A Structural Analysis, 105 Colum. L. Rev. 1315, 1319–20 (2005) [hereinafter Guidelines Failure].

What has been the cumulative impact of these amendments on white-collar crime sentences? It will obviously depend on the case, but one example discussed in a sample Federal Public Defender sentencing memorandum for an actual case illustrates a fivefold increase in the federal sentencing guideline range for one client—from 30–37 months in 1987 to 151–88 months in 2003. See Sentencing Memo in Fraud Case, at 29–30, available at www.fd.org/odstb_SentencingResource3.htm#DECONS (last visited Oct. 21, 2011).

The Greater Disease: The Overuse of Incarceration to Attack Crime

There is an obvious alternative remedy for the disparity between sentences for white-collar crime and sentences for blue-collar crime. That is the reduction of sentences for blue-collar crime, or even a partial reduction for those sentences and a partial increase in white-collar crime sentences. The Sentencing Commission and Congress have largely ignored this possibility, however, with the notable recent exception of the reduction in crack cocaine sentences that is discussed in the sidebar on p. 10.

Lest one think the sentences we impose in this country for crime are innately reasonable and reflective of how any civilized society might choose to deal with crime, compare the sentences we impose in this country to the sentences imposed in other “first world” countries, for example, some of the countries in Western Europe. It is relatively well known that the United States has the highest prison population rate in the world; a 2009 estimate from the International Centre for Prison Studies at King’s College in London put the incarceration rate here at 756 per 100,000 of the country’s population, with Russia second at 629 per 100,000. The same survey found that prisons in the United States hold almost half of all persons held in penal institutions around the world. See Roy Walmsley, World Prison Population List (8th ed. Jan. 2009), www.kcl.ac.uk/depsta/law/research/icps/downloads.php?searchtitle=world+prison&type=0&month=0&year=0&lang=0&author=&search=Search (last visited Nov. 15, 2011).

It is difficult to make completely accurate comparisons between sentences imposed here to those in other countries. However, not only are more people incarcerated in this country, but their sentences—based on studies that compared similar offenses—seem to be longer. One comparative study found that “in the case of property crime, it is clear that the United States incarcerates more and for longer periods of time than similar nations.” Persons sentenced for burglary in the United States served 16.2 months in prison on average, compared to 5.3 months in Canada and 6.8 months in England and Wales. J. Lynch, Crime in International Perspective, in Crime 37 (J. Wilson & J. Petersilia eds., Institute for Contemporary Studies (1995)).

So, why do we put people in prison for so much longer in this country than other first-world countries? Such long sentences do not seem to be necessary to deter crime. A wealth of studies suggest, perhaps especially in the case of white-collar offenders but also more generally, that it is the certainty of punishment, i.e., the certainty of being caught, that deters more than the extent of punishment once caught. See, e.g., Michael Tonry, Purposes and Functions of Sentencing, 34 Crime & Just.: A Review of Research 28–29 (2006); Gary Kleck et al., The Missing Link in General Deterrence Theory, 43 Criminology 623 (2005); Andrew Von Hirsch et al., Criminal Deterrence and Sentence Severity: An Analysis of Recent Research (1999); David Weisburd et al., Specific Deterrence in a Sample of Offenders Convicted of White-Collar Crimes, 33 Criminology 587 (1995).

One part of the problem lies in the creation of guidelines that necessarily rely on quantification of sentencing considerations. Certain aggravating factors, such as loss, tend to be easy to quantify, while most mitigating factors, such as mental health factors, motive and intent, remorse, and family responsibilities and/or contributions to the community are nearly impossible to put a number on. As a result, the more easily quantifiable factors get readily included in a detailed escalating table and the less easily quantifiable ones are either ignored or have a single, random number attached with no recognition of the inherent variability of the factor. Compare U.S.S.G. § 2B1.1(b)(1) (loss table for theft and fraud with sixteen separate subcategories of loss ranging from $5,000 or less to more than $400 million) with U.S.S.G. § 3E1.1 (fixed two-level decrease for “acceptance of responsibility” in cases with offense levels of less than sixteen, with the possibility of additional one-level decrease in cases with offense levels of sixteen or more in which “acceptance” is sufficiently early to save government resources).

Federal judges have recognized this problem in applying the amended sentencing guidelines for fraud. Not every white-collar offender is a Bernard Madoff. District judges sentencing defendants under these guidelines have spoken of the guidelines’ “inordinate emphasis” on loss, United States v. Adelson, 441 F. Supp. 2d 506, 509 (S.D.N.Y. 2006); the guidelines’ “effort to fit infinite variations on the theme of greed into a limited set of narrow sentencing boxes,” United States v. Emmenegger, 329 F. Supp. 2d 416, 427 (S.D.N.Y. 2004); and the guidelines’ “fetish with absolute arithmetic,” United States v. Parris, 573 F. Supp. 2d 744, 751 (E.D.N.Y. 2006) (quoting Adelson, 441 F. Supp. 2d at 509). They have further pointed out that “[i]n many cases, . . . the amount stolen is a relatively weak indicator of the moral seriousness of the offense [and that] [t]o a considerable extent, the amount of loss . . . is a kind of accident, dependent as much on the diligence of the victim’s security procedures as on [a defendant’s] cupidity.” Emmenegger, 329 F. Supp. 2d at 427. They have expressed concern about “the harm that guideline calculations can visit on human beings, if not cabined by common sense.’” Parris, 573 F. Supp. 2d at 751 (quoting Adelson, 441 F. Supp. 2d at 512).

Another part of the problem is the formulation of sentencing standards at a generalized policy or political level rather than the focusing on individualized sentences in individual cases. The percentage of our senators, congressmen, and congresswomen—and Sentencing Commissioners—who know or have had close contact with someone who has been a victim of crime is probably relatively high. The percentage who know or have had close contact with someone who has had to serve time in prison, on the other hand, is probably relatively low. So the senators, congressmen, and congresswomen—and Sentencing Commissioners—naturally empathize with crime victims and not criminal defendants and their families. While judges may not be any more diverse in their social associations, a judge sentencing a defendant in an individual case at least has the individual defendant and that defendant’s family in front of him or her in person when he or she imposes a sentence.

Similar observations have been made by Justice Breyer and Professor Bowman. In one of his discussions of the development of the original guidelines and the Sentencing Commission’s consideration of the purposes of punishment that should underlie them, Justice Breyer noted that different commissioners might see the relative harm of different crimes differently and suggested that “[a] group process in which members accept each other’s strongly held views may lead to a compromise that results in higher sentences than a majority of the commission would believe appropriate in respect to any one set of crimes.” Guidelines Revisited, at 30. Professor Bowman similarly concluded, at least eventually, that “[b]asic structural features . . . , in combination with a series of choices by the Commission, Congress, the judiciary, and the Department of Justice, have shifted the institutional balance of power” and made the guidelines the “one way upward ratchet increasingly divorced from considerations of sound public policy and . . . commonsense judgments of frontline sentencing professionals who apply the rules” that are described above. Guidelines Failure, at 1319–20.

Conclusion

Based on all of this, the sentencing guidelines may be fairly described as “flawed in ways that cannot be corrected without fundamental change.” Guidelines Failure, at 1320. The authors would submit that the same could be said of sentencing schemes in most states over the last thirty to forty years. While our country certainly has much to be proud of in its human rights record, its excessive use of imprisonment is a dark blemish on that record.

Advertisement

  • About the Magazine

  • Copyright Information